Ethereum isn’t all about decentralized finance…but it’s darn close to it. Last month, Ethereum’s founder Vitalik Buterin warned that DeFi may be becoming too much of a gambler’s den — with derivative on top of derivative, trying to capture yield, and not much else.
“Ethereum has to expand beyond just trading tokens and helping to create other tokens,” he said, standing thin in a brown T-shirt and blue jean shorts at the EthCC  conference on July 20-22 in Paris. “If you just take DeFi and push it into infinity, you’re just going to get tokens that give you profit from yield farming, and prediction markets on top of yield tokens,” he warned. “That’s good up to layer two, but once you start getting up to layer six you’re setting yourself up for a collapse and potentially getting a lot of regulators angry.”
Buterin’s mid-summer presentation at EthCC 4 shed light on the goal for Ethereum projects to be incentive-oriented and serve more as a public good rather than just being used to tokenize derivatives on top of tokens. He essentially described that type of DeFi as not any different than another financial instruments, questioning the need for them if there was no real public good — namely, allowing for a decentralized financial system to take true shape and function beyond the existing centralized one.